Supply and Demand

Definitions

100

Define supply

The amount a seller is willing to offer for sale

200

Define demand

The amount a buyer is willing and able to buy

300

Define surplus

When supply is higher than demand

400

Define the law of demand

As the price of goods go up then the demand for goods will go down, if the price goes down then demand will go up

500

Define the law of supply

As the price of goods go up the supply will also go up, as the price of goods go down the supply will also go down

Supply Determinants

100

Name 1 determinant of supply

1. Change in cost of the factors of production (land, labor, capital)

2. Changes in technology

3. Change in profit opportunities producing other products

4. Producers’ expectation of price

5. Change in number of sellers

200

What is an example of a factor of production?

land, labor, capital

300

An increase in the number of sellers will cause supply to __________ (increase or decrease)

increase

400

If cost of production decreases then supply will ________ (increase or decrease)

increase

500

List the 5 determinants of supply

1. Change in cost of the factors of production (land, labor, capital)

2. Changes in technology

3. Change in profit opportunities producing other products

4. Producers’ expectation of price

5. Change in number of sellers

Demand Determinants

100

Name 1 determinant of demand

1. Change in income

2. Change in consumers tastes

3. Change in price of a substitute good

4. Change in the price on a complementary good

5. Consumer expectation of price

6. Change in population

200

If income increases, then demand for goods and services __________ (increases or decreases)

increases

300

What is a complementary good? 

Goods that go together 

Ex: PB and J

400

What is a substitute good?

An alternate good, replacement or a stand-in

500

List the 6 determinants of demand

1. Change in income

2. Change in consumers tastes

3. Change in price of a substitute good

4. Change in the price on a complementary good

5. Consumer expectation of price

6. Change in population

Scenarios

100

Will this change demand or supply?

Immigrants increase the US population

Demand

200

Will this change demand or supply?

New technology increases the efficiency of production.

Supply

300

Will this change demand or supply?

Household wages decrease.

Demand

400

Will this cause demand for a good to increase or decrease?

The price of a complementary good increases

Decreases

500

Will this cause supply for cookies to increase or decrease?

A disease causing 70% of wheat production to decrease

decrease